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Mastering Emotions in the midst of Market Volatility
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Francis Investment Counsel

The Way Back: Economic Recovery in the Wake of COVID-19
RECORDED
Francis Investment Counsel

We CARES: Now we know! SPECIAL EDITION
June 24, 2020 WEBCAST
ERISApedia.com

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[Guidance Overview]

Who'd Have Thunk -- The IRS CARES! Notice 2020-50 Expands List of Qualified Individuals, Provides Additional Guidance

"Many practitioners were concerned at earlier information provided by the IRS that indicated that employee certifications of QI status could be relied upon only if the employer had no contrary actual knowledge. The question arose whether this produced some responsibility on the part of the employer to investigate the status. [ Notice 2020-50 ] clarifies that 'actual knowledge' means, in this context, that the employer 'already possesses sufficient accurate information to determine the veracity of the employee's certification.' There is no duty to inquire further.... It has been somewhat up-in-the-air ... how the repayment of the loan is supposed to occur, with most practitioners looking to the rules that applied for loans to Hurricane Katrina victims.... The Notice discusses this issue and reaches something of a middle ground. First, the Notice provides a safe harbor that is, of course, deemed to be permissible. It also permits other 'more complex' methods, if the QI desires to use them."

Ferenczy Benefits Law Center

[Guidance Overview]

IRS Releases Long-Anticipated Guidance on CARES Act Loans/Distributions

"IRS Notice 2020-50  ... [includes] significant new provisions ... [1] The list of permissible COVID-19-related distributions with favorable tax treatment has been expanded.... [2] There is a safe harbor ... for the administration of the delay in loan repayments due through the end of 2020.... [3] Model self-certification language for a COVID-19 distribution was provided.... [4] Amounts that are not eligible rollover distributions cannot be treated as COVID-19 distributions.... [5] COVID-19 distribution repayments will not count toward the one IRA rollover per year limit.... [6] 409A non-qualified deferred compensation plans (including 457(f) plans) can cancel deferral elections for those who receive a COVID-19 distribution."

Cammack Retirement Group

Private Equity Cracks 401(k)s with Teamwork

"Private equity's successful campaign to access federally protected 401(k) plans took persistence, collaboration, and some help from a well-connected D.C. law firm.... [A] 'broad coalition of investor-oriented partners' contributed to the concerted effort over the course of nearly a decade. That includes Groom Law Group, the boutique ERISA firm that represented Pantheon and Partners in requesting the letter. Influential trade groups ... also played an important role in a big win for private equity.... Having [SEC] Chairman Jay Clayton lend his support also didn't hurt."

Bloomberg Law

Summary of Provisions That Would Change the Social Security Program (PDF)

33 pages; Jun. 15, 2020. '[This paper] contains summaries of provisions that would change the Social Security Program, along with the resulting financial effects.... Following a brief description of each provision [are] two key indicators of the financial effect on the combined OASI and DI Trust Funds. The first, the change in the 75-year long-range actuarial balance, indicates the financial effect of the provision over the entire long-range (75-year) period. The second, the change in the annual balance as of the 75th year, gives an indication of the year-by-year expected gain or shortfall after the provision has been in place for a long period of time."

Office of the Chief Actuary, U.S. Social Security Administration [SSA]

Lack of Risk-Based Conversations Hinders Retirement Readiness

"Six in 10 non-retirees said running out of money before they die is one of their biggest worries, yet only 27% who work with a financial professional have discussed longevity risk. 55% of non-retirees said they are worried they won't have enough saved for retirement, yet only 6% have made developing a formal plan with a financial professional their top priority. Less than 30% of Americans who work with a financial professional said they had discussed market risks."

Allianz Life Insurance Company of North America

[Opinion]

Why 401(k) Plan Sponsors Who Offer Private Equity Funds Could Be Sued

"[P]rivate equity investments are the highest cost, highest risk investments ever devised by Wall Street. 401(k) sponsors will be hard pressed to conclude the fees and risks are justified in the pursuit of promises of superior performance. Further, as a result of the weighty fees and other risks, PE investments will more-often-than-not underperform resulting in 401(k) losses."

Edward Siedle, in Forbes

[Opinion]

Private Equity in 401(k) Plans: More Smoke Than Fire

"This ruling, to be generous, was peculiar. Why only private equity? Why not hedge funds, or managed futures? The answer is because the [DOL] did not make its announcement after researching all unregistered securities and deciding that only private equity funds deserved to make the grade, but instead because private equity executives got in front of them. Request made, reviewed, granted."

John Rekenthaler, via Morningstar

[Opinion]

Supreme Court Decision Highlights 'Regulatory Phalanx' Facing ERISA Fiduciaries

"[T]he question for later decisions is whether Thole is hinged to its unique facts.... It may be that a non-egregious alleged fiduciary breach not threatening plan viability will no longer be the subject of private litigation where the plan is paying benefits as due. For participants in defined benefit plans that are in financial distress or who claim egregious breaches producing substantial viability threat, however, Thole may not be the end of the story. And for fiduciaries of those other plans, it will be important to understand the contours of what Thole does not address.' [ Thole v. U.S. Bank N.A. , No. 17-1712 (S. Ct. Jun. 1, 2020)]

Jeffrey D. Mamorsky and Jonathan L. Sulds, via Pensions & Investments

[Guidance Overview]

Upcoming Key Compliance Deadlines and Reminders for Third Quarter 2020

"[In this article] you'll find various filings due in the coming summer months that may or may not be applicable based on your plan's characteristics. Of specific note is the July 15 extended deadline for filing Form 5500, for plans with original or extended Form 5500 deadlines falling between April 1 and July 15, 2020. The deadline to provide the associated Summary Annual Report has also been extended."

Lockton

Most Employers Don't Have Formal Work from Home Policies

"In spite of the record number of employees now working from home due to the COVID-19 pandemic, most employers (70%) do not have a formal policy for their workforce who are required to work from home (versus voluntary request).... Only 25% of employers ... offer monetary allowances to purchase equipment or supplies for employees permanently working from home.... Employers ... offered reimbursement or an allowance for equipment including laptop (66%), monitor (43%), cell phone (40%) and a printer (15%).

Midwest Business Group on Health

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CARES Act Distribution: Can Participant Under Age 59-1/2 Withdraw Safe Harbor Money?

"If someone under the age of 59-1/2 wishes to take a withdrawal based on the CARES Act, are they still restricted on money type(s)? In other words, can they withdraw their Safe Harbor money?"

BenefitsLink Message Boards

RMD for Spousal Beneficiary

"Husband and wife are 50/50 owners of Company A that sponsors the Company A 401(k) Plan. Husband dies in December 2019 at the age of 70-1/2. Wife is age 58 and is sole beneficiary. The required beginning date would have been April 1, 2020 but the 2019 RMD was not taken when CARES was enacted so no 2019 RMD has been distributed. Wife wants to roll over Husband's 401(k) account balance into her 401(k) account. Can she do this and avoid RMDs until she reaches age 72? I don't see why not, but the RMD rules with a deceased participant always trip me up."

BenefitsLink Message Boards

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Press Releases

Denise Appleby Appointed to Retirement Benefits Committee Editorial Advisory Board of Trust & Estates Magazine Appleby Retirement Consulting Inc.

Two Industry Champions Take Up the Challenge of Advising Clients? 'Next Chapter' Money Management Institute

NFP Acquires Leavitt Insurance Services of San Diego, Expanding Property and Casualty and Employee Benefits Capabilities NFP Corp.

The Retirement Advantage, Inc. Expands National Footprint with Acquisition of PlanTech, LLP The Retirement Advantage [TRA]

Brendan Hyde Named Director of Retirement Services at Compass Advisors Compass Advisors

Chelko Strengthens Experience and Actuarial Expertise by Adding Parsons Chelko

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Most Popular Items in the Previous Issue

Text of IRS Notice 2020-50: Guidance for Coronavirus-Related Distributions and Loans from Retirement Plans Under the CARES Act (PDF) Internal Revenue Service [IRS]

IRS Determination Letter Program: Upcoming Deadlines and Recent Developments Groom Law Group

401(k) Plan Sued for COVID-19-Related Special Asset Valuation American Retirement Association [ARA]